Correlation Between Ford and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ford and Western Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Western Asset Municipal, you can compare the effects of market volatilities on Ford and Western Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Western Asset.
Diversification Opportunities for Ford and Western Asset
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Ford i.e., Ford and Western Asset go up and down completely randomly.
Pair Corralation between Ford and Western Asset
If you would invest (100.00) in Western Asset Municipal on November 29, 2024 and sell it today you would earn a total of 100.00 from holding Western Asset Municipal or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. Western Asset Municipal
Performance |
| Timeline |
| Ford Motor |
| Western Asset Municipal |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Ford and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Western Asset
The main advantage of trading using opposite Ford and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Western Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Asset will offset losses from the drop in Western Asset's long position.The idea behind Ford Motor and Western Asset Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Western Asset vs. Eagle Point Income | Western Asset vs. Nuveen New York | Western Asset vs. MFS High Income | Western Asset vs. MFS High Yield |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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